Ohio business tax cut Q&A

Sunday

Jun 11, 2017 at 5:16 AM

The Columbus Dispatch

What is the Ohio business-income tax deduction?

A tax cut that proponents said would create jobs by helping Ohioans who file their business revenue as personal income. When implemented by the General Assembly and Gov. John Kasich in 2013, it exempted 50 percent of the first $250,000 of a person’s “pass-through” income from state income tax. In 2015, the cut was increased to exempt all of the first $250,000 of pass-through income from state income taxes. It also cut the rate for income above $250,000 from 5 percent to 3 percent.

What is a pass-through entity?

Sole proprietorships, partnerships, LLCs and S corporations. These entities are not subject to the federal corporate income tax.

What is a sole proprietorship?

An unincorporated business owned and run by a single individual with no distinction between the business and the owner.

What is a partnership?

A single business where two or more people share ownership.

What is an S Corp?

A corporation whose profits are not taxed, but passed through to its shareholders and then taxed as income.

What is an LLC?

A limited liability company combines the limited liability of a corporation with the tax efficiencies and flexibility of a partnership. Profits on an LLC are “passed through” to each owner, or “member.”

Sources: Ohio Department of Taxation; Tax Foundation; U.S. Small Business Administration